ASIA BANKING CORPORATION, Plaintiff-Appellee vs.

JUAN JAVIER, limited co-

partnership, Defendant-Appellant.
GR No.19051
April 04, 1923.
AVANCEÑA, J.

FACTS:

On May 10, 1920, Salvador B. Chaves drew a check on the Philippine National Bank for
P11,000 in favor of La Insular, a concern doing business in this city. This check was endorsed
by the limited partners of La Insular, and then deposited by Salvador B.Chaves in his current
account with the plaintiff, Asia Banking Corporation (ABC). The deposit was made on July 14,
1920. On June 25, 1920, Salvador B. Chaves drew another check for P18,785.30 on the
Philippine National Bank, in favor of the aforesaid La Insular. This check was also endorsed by
the limited partners of La Insular, and was likewise deposited by Salvador B.Chaves in his
current account with ABC, on July 6, 1920.After the checks were deposited in ABC bank, the
amount represented by both checks was used by Salvador B. Chaves by drawing checks on the
plaintiff. Subsequently these checks were presented by the ABC to the Philippine National Bank
for payment, but the latter refused to pay on the ground that the drawer, Salvador B. Chaves,
had no funds therein.

Lower court ruled in favor of the ABC, sentencing Javier to pay the value of both checks; hence
the appeal.

ISSUE: Whether or not the liability of defendant Javier as endorser of the checks in
question was extinguished.

RULING:

Section 89 of the Negotiable Instruments Law (Act No. 2031) provides that, when a negotiable
instrument is dishonored for non-acceptance or non-payment, notice thereof must be given to
the drawer and each of the indorsers, and those who are not notified shall be discharged from
liability, except where this act provides otherwise. According to this, the indorsers are not liable
unless they are notified that the document was dishonored. Then, under the general principle of
the law of procedure, it will be incumbent upon the plaintiff, who seeks to enforce the
defendant's liability upon these checks as indorser, to establish said liability by proving that
notice was given to the defendant within the time, and in the manner, required by the law that
the checks in question had been dishonored. If these facts are not proven, the plaintiff has not
sufficiently established the defendant's liability. There is no proof in the record tending to show
that plaintiff gave any notice whatsoever to the defendant that the checks in question had been
dishonored, and therefore it has not established its cause of action.
For the foregoing, the judgment appealed from is reversed and the defendant is absolved from
the complaint without special pronouncement as to costs.